Question
4. Receivables Investment Patriots Industries sells on terms of 3/10, net 30. Total sales for the year are $912,500; 40% of customers pay on the
| 4. Receivables Investment |
| Patriots Industries sells on terms of 3/10, net 30. Total sales for the year are $912,500; 40% of customers pay on the 10th day and take discounts, while the other 60% pay (on average) 40 days after their purchases. |
| a. What is the days sales outstanding? |
| b. What is the average amount of receivables? |
| c. What is the percentage cost of trade credit to customers who take the discount? |
| d. What is the percentage cost of trade credit to customers who do not take the discount and pay in 40 days? |
e. What would happen to Patriots accounts receivable if it toughened up on its collection policy with the result that all non-discount customers paid on the 30th day? |
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Foundations Of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
11th Canadian Edition
1259024970, 978-1259265921
